More companies globally are setting net zero emissions targets, but fewer than one in ten are on track to achieve their goals, according to a new report released by global professional services firm Accenture.

For the new report, “Accelerating Global Companies toward Net Zero by 2050,” Accenture analyzed the commitments to emissions reduction and data from the 2,000 largest public and private companies (G2000) around the world.

The study indicated that the pace of net zero target setting by major companies remains strong, despite the macroeconomic turbulence and energy price fluctuations over the past year. 34% of the G2000 companies have made net zero commitments, an increase of 7 percentage points since the end of 2021. Target setting momentum has been particularly strong in Europe, with over half (51%) of G2000 companies in the region now covered with a net zero target, up 14 percentage points over last year, compared to 28% in North America (up 5pp) and 28% in the rest of the world (up 4 pp).

The report also indicated, however, a need to dramatically ramp emissions reductions in order to meet these goals, with only 7% of G2000 companies on track to achieve their own net zero targets for scope 1 & 2 emissions. According to Accenture, the remaining 93% will need to at least double the pace of emissions reductions by 2030 in order to meet their goals, and continue to significantly cut emissions after that to hit net zero by 2050.

Jean-Marc Ollagnier, CEO of Accenture for Europe, said:

“Amid global economic, political and environmental disruption, more companies than ever before have publicly committed to largely decarbonizing by around 2050. This heightened ambition is encouraging, but it is also clear that a steep acceleration of emission reductions is required.”

While most companies are not yet on track to meet their climate goals, however, the report found that momentum towards achieving sustainability targets has picked up over the past year, with companies increasing investments and taking more comprehensive measures to cut emissions. 84% of companies said that they plan to increase investments in sustainability initiatives in the current year, up from 80% in the prior year.

Target setting has become more sophisticated as well, with 2022 seeing a record rise in the number of corporate targets validated by the Science Based Targets initiative (SBTi). Companies are also increasingly setting interim goals, with 83% of those with net zero targets now also providing intermediate targets, up from only 66% a year ago. Transparency is improving as well, with 81% of companies with net zero targets reporting against the recommendations of the Taskforce on Climate Related Financial Disclosures (TCFD) framework.

The report highlighted the importance of these actions, revealing that companies with net zero targets significantly outperforming on emissions reduction. Between 2011 and 2020, for example, companies with full net zero targets saw an 18% relative change in Scope 1 and 2 emissions, compared to an increase in emissions of 20% for those without targets.

The study also examined the practices of those companies that were on track to reach their net zero targets, and found that they were more likely to ensure that their targets are science-based, build in methods to reduce energy use and emissions, implement more complex mechanisms such as internal carbon pricing, and report against prominent ESG frameworks.

Peter Lacy, Accenture’s global Sustainability Services lead and Chief Responsibility Officer, said:

“Now is perhaps a tougher time to be a CEO than any stage in the recent past, in particular, attempting to square the circle between sustainability commitments, inflationary and recessionary pressures and the need to deliver both shareholder and stakeholder value. This report – while extremely worrying with regards to the delivery trajectory on net zero – shows a clear pathway for companies to create value and impact at a time when capital markets, governments and other organizations will create even more pressure to deliver on targets set through transparency, comparability and consistency.”